How Do Working Capital Loans Work?

Working Capital Loans - 2 Min Read

As you explore various business financing options, you may come across the term “working capital loan” and assume that it’s just another way of saying “business loan.” Well, you’re half right!

Yes, a working capital loan is business loan, in the sense that you borrow funds for your business and pay them back at an agreed upon interest rate, and in an agreed upon timeframe.

But no, a working capital loan isn’t a business loan in the sense that there are significant benefits when you compare it to what banks offer (a.k.a. conventional bank loans).

To help you get the facts you need to get a clear picture – and make an informed decision – here are some key facts on how working capital loans work:

  • Application: Unlike conventional bank loan applications that can be excessive and invasive, applying for a working capital loan is simple and streamlined and takes minutes vs. hours (or even days!). 
  • Approval: Assessing a working capital loan application typically takes 48 hours or less, and upon agreement signing the funds are usually available within a few days. Compare this to conventional bank loans, where the evaluation process can take several weeks — and even then there is no guarantee that it will be approved.
  • Loan Amount: One of the greatest things that distinguish a working capital loan from its counterparts is that the loan amount offered doesn’t reference credit or debit volume. It’s simply based on historical and predictable total gross sales of the business. As a result, these loans are suitable for businesses who may not take card payments.
  • Repayment: You repay your working capital loan by having a small fixed amount automatically deducted from your bank account. The keywords here are “small” and “automatic”. As such, you don’t have to worry about having to make a large lump sum payment each month. You also don’t have to worry about missing a payment because you’re too busy running your business!
  • Pre-payment: If you wish, you can pay off your working capital loan earlier than required, and therefore save interest costs. Beware: if you attempt to do this with a conventional bank loan, you’ll incur pre-payment penalties!

As you can see, there are several benefits associated with a working capital loan that don’t apply to a conventional bank loan. Indeed, this is why a growing number of small and mid-sized business owners like you are looking past their bank, and towards an alternative lending partner like Mulligan Funding.

Contact us today for a free consultation

Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.